OMB urges use of shared-services approach to telecom via Networx

'What we're looking at is leveraging our buying power to the greatest extent possible in telecommunications.'

'David Safavian, OFPP administrator

Rick Steele

'My intent is to make sure no matter what the requirements are from agencies, we can meet their needs.'

'FTS' John C. Johnson

Administration reins in Treasury for striking out on its own; GAO chides department for failing to disclose Networx agreement

The Office of Management and Budget has made it clear that it will steer agencies toward the General Services Administration's Networx telecommunications contract instead of letting them strike separate deals to modernize their networks.

This expansion of the administration's shared-services policy is best illustrated by the ruckus over the Treasury Department's Communications Enterprise contract.

The Government Accountability Office recently sustained several protests of Treasury's award of the $1 billion, 10-year TCE contract to AT&T Corp.

Auditors said Treasury did not inform bidders of an agreement with OMB and GSA making it less likely that Treasury would extend the contract beyond the three-year base period. The agreement ensures that Treasury will migrate to Networx, the follow-on to FTS 2001.

'This is no different in the telecommunications area than what we've done with the line-of-business analysis for human resources or financial management,' said Karen Evans, OMB's administrator for e-government and IT. 'We don't necessarily come out and say it's mandatory. What we say is that you have to have a good business case to show why you're not using the common solution.'

GSA expects to award the multibillion-dollar Networx contracts next year.

'What we're looking at is leveraging our buying power to the greatest extent possible in telecommunications,' said David Safavian, administrator for the Office of Federal Procurement Policy.

When agencies contract for services individually, 'from an economic perspective, all that does is fractionalize our buying power,' he added.

'The only way that an agency can have a business case that passes scrutiny is that they can justify that it is in the government's best interest to be outside of the Networx contract,' Evans said.

No other agency is currently in exactly the same situation as Treasury with such a large, sweeping standalone network, she added. But many agencies do have smaller deals for comm services.

GAO recommended that Treasury revise its procurement specifications to reflect the memorandum of understanding regarding the transition to Networx and reopen the competition. Treasury has until mid-May to notify GAO of its intentions.

The current Treasury Communications Services contract expires in September, almost a year before GSA expects to award Networx. Planning for its next-generation network proposal spanned four Treasury CIOs and began long before OMB had established its shared-services policy.

But last year, OMB began lobbying then-Treasury CIO Drew Ladner to bring the department into the Networx fold. It finalized the agreement with current CIO Ira Hobbs.

'Treasury made the case that their systems were on their last legs. They didn't have time to wait around for Networx to come online,' Safavian said, explaining why OMB pursued the agreement for the shift later.

The deal reflects the changing policy and political landscape, said Bob Woods, president of Topside Consulting LLC of Vienna, Va., and a former Federal Technology Service commissioner at GSA.

'I do think they got pressured into doing something. One of the great variables that's lost in these jumbo procurements is the political factor,' Woods said.

That political factor comes through in the wording of the agreement. It makes clear that OMB has final authority if Treasury and GSA disagree over a best-value analysis of the contract's performance during the base period. The analysis is supposed to determine if TCE is in the best interests of the government, not just what's best for Treasury.

Safavian would not comment on the GAO decision, but he noted, 'Nowhere in that opinion does it say that the MOU is either a bad idea, bad policy or inappropriate.'

Rep. Tom Davis (R-Va.), whose House Government Reform Committee has oversight over federal telecommunications issues, also has criticized Treasury for proceeding alone on a network deal.

'It is now time for Treasury to put aside the TCE stovepipe intentions and work toward a Networx strategy that is in the broader government interest,' committee spokesman Drew Crockett said.TCE fosters duplicative administrative procurement functions across government, which are more costly and less efficient than procurements for centrally managed core services, he said.

Go it alone

But not everyone is convinced that one telecommunications program can fulfill every agency's needs.

'It doesn't make sense either for agencies exclusively to go it alone or for the U.S. government to try a long-discredited central-planning approach,' said Ladner, who is now president of Zuri Technology Inc. of Washington. 'It does make sense to aggregate government purchasing power and to ensure that the changing demands of agencies' day-to-day operational requirements are addressed in any governmentwide contract, especially in areas like billing that constantly evolve and innovate.'

But GSA officials expect Networx will be attractive to all agencies.

'My intent is to make sure no matter what the requirements are from agencies, we can meet their needs,' said John C. Johnson, assistant commissioner of FTS for service development and delivery.